Sole Proprietor vs LLC vs S-Corp

How accurate is that wizard link posted on the previous page

 

There is no difference in a corporate setup based upon the type of business. A trucking company is set up the same as a retailer as far as the corporate structure is concerned. The difference is in how you do your books. If you want something that is trucking specific, you may want to consider bookkeeping software specific to the trucking industry. I have used Trucknpro for a number of years. It breaks down specific expenses, such as maintenance, weigh tickets, etc., It also has the capability of being customized, to some extent. I have an expense for tires that I did on my program so that I can more easily track my tire costs. The program is inexpensive. I have several friends who have used the program for a number of years. They recently came out with a program just for the owner operator with only one truck. The program also keeps track of your per diem. Trucking has a unique per diem deduction not offered to other industries. In order to receive the deduction, you must keep track of your days away fro home. The newer Trucknpro programs have the per diem feature. At the end of the year, you just print out the reports you need for taxes and give it to your tax preparer or use it to do your own taxes.

 

You can become an llc and choose to be taxed as a s-corp. Pay yourself minimum wages for driver in your area and take the rest as capital gains (no payroll taxes). Also, as a single owner llc you dont pay corp tax if you run nj. If you are an s-corp or c-corp and do any business in nj (pick up or delivery), you have to pay corp tax to nj. Two forms required to file with irs when you are llc filing as s-corp.

 

I believe you meant dividends rather than capital gains. In order to pay capital gains tax you must sell an asset, such as stock or real estate that you have held for at least 6 months. But, by paying yourself a small wage and the rest of your income as dividends you could avoid paying the social security tax and employer contributions. This could save you about 15% of your taxes. You pay income tax on the dividends.

 

Thanks gman that is correct. New jersey will fine u if u r set up as s corp or c corp and dont pay them corp tax if u do business in nj. Not sure if other states do similar tax requirement. Only sole proprietor and llc can escape that tax. I think its about 500 dollars. Stiff fine if caught during inspection.

 

NJ calls it a rolling warehouse tax, I believe. Just one more reason to avoid NJ.